The Government has announced plans to scale back energy subsidies for businesses for the next financial year to £5.5 billion describing the current level of support as “unsustainably expensive”.
The current six-month programme of energy support that will expire at the end of March and is estimated to have cost around £18 billion
My top priority is tackling the rising cost of living – something that both families and businesses are struggling with,” the Chancellor Jeremy Hunt said in a statement.
“That means taking difficult decisions to bring down inflation while giving as much support to families and business as we are able.”
The new scheme that will run until March 2024 will see firms get a discount on wholesale prices rather than their costs being capped as under the current one.
Wholesale gas prices are now below the level they were before Russia’s invasion of Ukraine, but still three to four times higher than their long-term average.
Higher energy intensive businesses will get a higher discount
Lee Morgan, Managing Director of Manchester based Pilot Group’s Energy Management division,said:
“The big question about the Government’s energy bill relief scheme was what’s next? So it’s good to see that they are extending it until March 2024 to avoid a sudden stop in support for businesses across the UK.
“While the Government’s current aid is welcome, it will be at a reduced cost from April and the pinch is likely to be felt by smaller firms who are already struggling to keep their head above water under the pressure of unprecedented energy bills.
“It’s therefore vital for organisations to look at streamlining their usage wherever possible, and this is something which can be done through energy management and monitoring. For any organisation which is looking to do this, Pilot Group’s expertise can help highlight a clear path towards meeting the challenge of energy costs head on.”
Tom Thackray, CBI Director for Decarbonisation Policy, said:
“The extension to the scheme will provide respite for many firms at the start of the year and help them plan ahead for the next 12 months with more certainty.
“It’s unrealistic to think the scheme could stay affordable in its current form, but some firms will undoubtedly still find the going hard. The Government has done much to protect businesses through the energy crisis. It must remain open, flexible and pragmatic in its approach to volatile wholesale energy markets as the year unfolds.
“Heavy energy users and those exposed to global trade are among some of the most impacted in the current crisis, so the additional support for these firms is a particularly welcome step.”
